Police in northwestern China have reportedly launched a formal investigation into a local government official accused of flooding and destroying an entire village to build his own hydropower station.

The decision was made late last month, 10 years after the construction of the dam in Shanyang county, Shaanxi province, Huashang Daily reported on Sunday.

Liu Minghou, director of Shanyang county’s liaison office in the provincial capital Xian, allegedly built the illegal dam with his own funds and drove hundreds of farmers out of Jinpen village in the flooded valley.

Thugs brandishing pickaxes forced reluctant farmers to move to higher ground where they watched their homes disappear beneath the surface of the new lake in 2007, according to an earlier report by the same newspaper in May.

Villagers claimed they had received little compensation for their lost buildings and farmland. Jinpen was once regarded one of the most prosperous villages in the region because it was on fertile land next to a small river.

Now the residents are living in hastily built houses on higher and less productive ground.

An unnamed official said the project did not have the full construction permits it needed, but was given the green light by senior county officials due to its importance to the local economy.